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H.R. 556 (National Security Foreign Investment Reform and Strengthened Transparency Act), McCaul of Texas amendment to require annual reporting on the effective rate of taxation on entrepreneurs and businesses compared to other countries/On agreeing to the amendment

This vote was on an amendment to a bill attempting to improve the security review required for foreign investments in the United States. The amendment, offered by Rep. Michael McCaul (R-Texas), would require the annual report to Congress by the Committee on Foreign Investment in the United States to include a detailed discussion of the effective rate of taxation on entrepreneurs and businesses in the United States compared to other countries.

The bill to which McCaul was seeking to amend was prompted by reports in 2006 that the Bush administration had approved a deal allowing Dubai Ports World -- a company owned by the government of the United Arab Emirates -- to manage six of the largest ports in the United States. The deal was approved with minimal review by the Committee on Foreign Investment in the United States (CFIUS). (After widespread criticism of the way the deal was approved, Dubai Ports World eventually withdrew its bid.)

McCaul said his amendment would improve the oversight requirements included in the underlying bill and would allow Congress to be better informed on how future legislation would affect foreign investment.

"The underlying bill is about how foreign investment affects national security, and there is no way to understand why foreign investments would be made here, or what it would do to our economy, without understanding the economic factors such as taxes," McCaul said during floor debate.

Financial Services Chairman Barney Frank (D-Mass.) said aligning the amendment to the overall intent of the legislation took "ingenuity."

"This is a requirement that the administration do a report about taxation as it affects business," Frank said, adding that McCaul only tied it to foreign investment in order to meet restrictions that any amendments be germane (relevant) to the bill. "This is a call for an annual report on the effective taxation on business," Frank continued, calling the amendment a "diversion."

Frank further pointed out that the White House did not support the amendment, as all parties concerned wanted to keep the bill narrowly targeted to deal with the national security implications of foreign investment.

Generally, however, Republicans are opposed to what they believe are excessive taxation on businesses, and so this amendment allowed them a venue to express displeasure at the current tax structure in the United States.

On a party-line vote, the House voted down the amendment. All but one Republican voted for it, and all but two Democrats voted against it, with a final tally of 198-228. Thus, the House defeated an amendment to require annual reporting on the effective rate of taxation on entrepreneurs and businesses, and a bill to improve the security review required for foreign investments in the United States proceeded without the provision.